What is the definition of Fiduciary and why does it matter? For the answer to this I will turn to an unbiased 3rd party source. Tony Robbins recent book Money: Master the Game has this to say on the subject.
"...many are operating in a "closed circuit" environment in which the tools at their disposal are pre-engineered to be in the best interest of the "house". The system is designed to reward them for selling, not for providing conflict-free advice. And the product or fund they sell you doesn't necessarily have to be the best available, or even in your best interest. By legal definition, all they have to do is provide you with a product that is "suitable". Page 125
According to David Karp, a registered investment advisor, the suitability standard essentially says, "It doesn't matter who benefits more, the client or the advisor. As long as an investment is suitable (meets the general direction of your goals and objectives) at the time it was placed for the client, the advisor is held free of liability" Page 126
The Gold Standard
To receive conflict-free advice, we must align ourselves with a fiduciary. A fiduciary is a legal standard adopted by a relatively small but growing segment of independent financial professionals who have abandoned their big-box firms, relinquished their broker status, and made the decision to become a registered investment advisor. These professionals get paid for financial advice and by law, must remove any potential conflict of interest (or at a minimum, disclose them) and put the clients' needs above their own. Page 126
To better understand the difference between your broker and a registered investment advisor watch this SHORT VIDEO and then give us a call.